Question

Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...

Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):

Product

A B C
Selling price $

80.00

$ 60.00 $ 72.00
Variable expenses:
Direct materials 24.00 15.00 9.00
Other variable expenses 24.00 33.00 45.00
Total variable expenses 48.00 48.00 54.00
Contribution margin $ 32.00 $ 12.00 $ 18.00
Contribution margin ratio 40 % 20 % 25 %

The company estimates that it can sell 1,000 units of each product per month. The same raw material is used in each product. The material costs $3 per pound with a maximum of 6,000 pounds available each month.

Required:

1. Calculate the contribution margin per pound of the constraining resource for each product.

2. Which orders would you advise the company to accept first, those for A, B, or C? Which orders second? Third?

3. What is the maximum contribution margin that the company can earn per month if it makes optimal use of its 6,000 pounds of materials?

Homework Answers

Answer #1
Product
A B C
Selling price 80 60 72
Variable expenses:
Direct materials 24 15 9
Other variable expenses 24 33 45
Total variable expenses 48 48 54
Contribution margin 32 12 18
Contribution margin ratio 40 20 25
Material Req per unit 8 5 3
1) Contribution per pound 4 2.4 6
(Contribution margin per unit/ material Req per unit)
2) Ranking of production Second Third First
3) No. of units to be manufactured 375 1000
material requirement in production 3000 3000
(Total 6000 pounds)
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit): Product A B C Selling price $ 72.00 $ 60.00 $ 62.00 Variable expenses: Direct materials 21.60 18.00 9.00 Other variable expenses 21.60 27.00 34.40 Total variable expenses 43.20 45.00 43.40 Contribution margin $ 28.80 $ 15.00 $ 18.60 Contribution margin ratio 40 % 25 % 30 % The company estimates that it can sell 1,000 units of each product per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit): Product A B C Selling price $ 84.00 $ 66.00 $ 74.00 Variable expenses: Direct materials 25.20 18.00 9.00 Other variable expenses 25.20 31.50 42.80 Total variable expenses 50.40 49.50 51.80 Contribution margin $ 33.60 $ 16.50 $ 22.20 Contribution margin ratio 40 % 25 % 30 % The company estimates that it can sell 850 units of each product per month. The same...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit):...
Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit): Product A B C Selling price $ 84.00 $ 70.00 $ 74.00 Variable expenses: Direct materials 25.20 21.00 9.00 Other variable expenses 25.20 31.50 42.80 Total variable expenses 50.40 52.50 51.80 Contribution margin $ 33.60 $ 17.50 $ 22.20 Contribution margin ratio 40 % 25 % 30 % The company estimates that it can sell 750 units of each product per month. The same...
Exercise 11-12 Volume Trade-Off Decisions [LO11-5] Benoit Company produces three products—A, B, and C. Data concerning...
Exercise 11-12 Volume Trade-Off Decisions [LO11-5] Benoit Company produces three products—A, B, and C. Data concerning the three products follow (per unit): Product A B C Selling price $ 88.00 $ 72.00 $ 78.00 Variable expenses: Direct materials 26.40 18.00 9.00 Other variable expenses 26.40 36.00 45.60 Total variable expenses 52.80 54.00 54.60 Contribution margin $ 35.20 $ 18.00 $ 23.40 Contribution margin ratio 40 % 25 % 30 % The company estimates that it can sell 900 units of...
Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per...
Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit): Product A B C   Selling price $ 100 $ 80 $ 90   Variable expenses:       Direct materials 30.00 24.00 6.30       Other variable expenses 30.00 36.00 56.70   Total variable expenses 60.00 60.00 63.00   Contribution margin $ 40.00 $ 20.00 $ 27.00   Contribution margin ratio 40 % 25 % 30 % Demand for the company’s products is very strong, with far more orders each month than...
Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per...
Benoit Company produces three products, A, B, and C. Data concerning the three products follow (per unit): Product A B C Selling price $ 65 $ 45 $ 55 Variable expenses: Direct materials 19.50 13.50 3.85 Other variable expenses 19.50 20.25 34.65 Total variable expenses 39.00 33.75 38.50 Contribution margin $ 26.00 $ 11.25 $ 16.50 Contribution margin ratio 40 % 25 % 30 % Demand for the company’s products is very strong, with far more orders each month than...
Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution...
Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product A B C Selling price $ 210 $ 330 $ 320 Variable expenses: Direct materials 21 63 28 Other variable expenses 147 168 244 Total variable expenses 168 231 272 Contribution margin $ 42 $ 99 $ 48 Contribution margin ratio 20 % 30 % 15 % The same raw material is used in all...
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures three products—A, B, and C. The...
Exercise 12-8 Volume Trade-Off Decisions [LO12-5, LO12-6] Barlow Company manufactures three products—A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product A B C Selling price $ 180 $ 270 $ 240 Variable expenses: Direct materials 24 80 32 Other variable expenses 102 90 148 Total variable expenses 126 170 180 Contribution margin $ 54 $ 100 $ 60 Contribution margin ratio 30 % 37 % 25 % The same...
Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution...
Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow: Product A B C Selling price $ 150 $ 240 $ 200 Variable expenses: Direct materials 12 48 18 Other variable expenses 108 120 152 Total variable expenses 120 168 170 Contribution margin $ 30 $ 72 $ 30 Contribution margin ratio 20 % 30 % 15 % The same raw material is used in all...
Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution...
Barlow Company manufactures three products: A, B, and C. The selling price, variable costs, and contribution margin for one unit of each product follow:    Product A B C   Selling price $ 200 $ 300 $ 280   Variable expenses:     Direct materials 28 70 35     Other variable expenses 112 110 175   Total variable expenses 140 180 210   Contribution margin $ 60 $ 120 $ 70   Contribution margin ratio 30 % 40 % 25 %    The same raw material is used...